Does Central Environmental Protection Inspector Improve Corporate Social Responsibility? Evidence from Chinese Listed Companies

Abstract

As an essential innovation in China’s environmental governance, the central environmental protection inspector policy (CEPI) plays a crucial role in driving the development of the corporate responsibility system. Using the difference-in-differences model with multiple time periods, samples of A-share listed companies in Shanghai and Shenzhen from 2013 to 2020 are chosen to examine the impact of the CEPI on corporate social responsibility within the context of China’s modern governance system. The results indicate the following: first, the CEPI can significantly promote enterprises to fulfil social responsibility; second, the local government environmental regulation and public participation are the dual guarantees for the effect of the CEPI’s policy, and market-based environmental regulation of the local government is more effective than command-and-control environmental regulation; and third, a high propensity for technological innovation is a critical incentive for businesses to fulfil their social responsibilities under the CEPI. For enterprises to actively respond to society, the compensation effect of innovation must be greater than its cost effect. By examining the interaction between the Central Government, the local government, companies and the public, this research aims to provide theoretical support for accelerating the creation of China’s contemporary environmental governance system.